Tag Archives: Ann Pappert

How Guelph Municipal Holdings Inc, covered-up losses of $68.3 million

By Gerry Barker

August 5, 2019

Opinion

Part Four of Seven

Previously in Guelph Speaks:

Catch-up synopsis of the first four posts about the turbulent and financial history of the two Guelph administrations serving the city in the past 13 years.

The introduction of the seven-part series summarizes the impact on the citizens.

Part One –The birth of the Community Energy Initiative and the failure of citizens to petition for an audit of the city’s finances by the Ministry of Municipal Affairs and Housing.

Part Two – The unrealistic goals of the Community Energy Innovation plan to restrict greenhouse gases, by 50 per cent less energy per capita.

Part Three – Executive spite cost citizens $23 million more than the new City Hall contract when the general contractor, Urbacon Building Group Inc, was fired with the project 95 per cent completed.

And now, Part Four- A convenient collusion in which Guelph Municipal Holdings Inc. lost $66 million

Details of this GMHI audited financial loss of $66 million, has been surrounded with few details of why, in four years, it lost $66 million.

More importat to citizens, is what did GMHI and Guelph Hydro, do with the money?

In this part you will learn about what we do know, including the duplicate management of Mayor Karen Farbridge and Ann Pappert, Chief Administrative Officer of the Guelp. The mayor was also chair of CMHI and CAO Pappert was also Chief Executive Officer of GMHI.

That set the stage for a convenient collusion that ended with the city stuck with a debit of $66 million.

Read on for the details of this project, how it was mismanaged, conducted its business in secret and there were no checks and balances by our elected representatives. The public interest was ignored as was accountability and transparency.

Again what did GMHI and or the city do with the money over the four years?

There are three clues to what happened. First clue, in May 2016, a report to council from the GMHI management stated the holding company, owned by the city, was losing money and the business plan was not viable.

The second clue was a devastating staff report in July 2016 that declared GMHI was $68.3 million in the hole.

The third clue was the 2016 consolidated audit by the accounting firm KPMG that, among other things, stated the shareholder’s liability was $66 million.

It is calculated by a staff management’s review that GMHI has an “investment impairment” of $68.3 million. By 2017, it was estimated GMHI had lost an additional $17 million and was losing money every year. The reason was the operation of GMHI’s defunct District Energy operations that had to continue servicing customers with hot and cold water.

Double-barreled command enhanced by closed-session meetings

It didn’t help the public to understand what was going on because the GMHI Board of Director’s (BOD) meetings were conducted in closed-session as were a number of council meetings regarding GMHI.

To be blunt, the Farbridge-inspired Community Energy Innovation (CEI) an enterprise project, created in 2007, was a financial disaster with little or no hope of ever becoming remotely viable or an asset of the city and its citizens.

These projects, inspired by the CEI manifesto, impacted needed infrastructre maintenance as funding was diverted to GMHI.

Proof is that in 2017, city council approved a special one per cent levy on property owners in the 2017 budget following the 2016 KPMG audit of GMHI. The money was to be applied to infrastructure maintenance and replacement.

The CEI manifesto is still being used today as a guideline to fulfill the objectives of the environmentalists looking to change the city to conform to their principlres.

This decision by council was made following a staff report that there was a shortfall in infrastructure requirements of $400 million.

In my opinion, this levy was a ludicrous attempt to thwart public interest into believing council was doing the right thing dealing with infrastructure demands.

Some words of wisdom from someone who has been there

Back then, for the newly elected Mayor, Karen Farbridge, the comment of former U.S First Lady, Michelle Obama, at the 2012 Democratic Convention: “ Being President doesn’t change who you are. It reveals who you are.”

Becoming mayor, revealed who Ms. Farbridge was. As we subsequently learned, she was canny, comfortable in her persona, secretive and determined to change our city into her image of what it should be.

Did I mention that she was ruthless in dominating her administration?

It became the centrepiece of the CEI and reflected the vision of Mayor Farbridge.

In retrospect, we learned who Ms. Farbridge was. She became the uber boss of Guelph, serving not only as Mayor but also chair of the GMHI Board of Directors with her CAI, Ann Pappert, as Chief Executive Officer of GMHI.

A convenient collusion denied public participation

To the best of my knowledge, neither woman had any technical experience in managing large energy projects. They oversaw the GMHI energy projects that cost citizens $68.3 million as well as the corporation of the City of Guelph.

As it turned out, the city corporation was also the GMHI banker.

Their secretive complicity reminds one of the lines in the movie, Field of Dreams: “If we build it, they will come.”

Today, Guelph’s enironmental dreams linger as both Ms. Farbridge and Ms. Pappert are gone. There is no apparent benefit to the public to show for the huge investment made by the unknown “institutional investors.” These unidentified investors spent millions in the GMHI projects because they were convinced their boss, Mayor Farbridge, was in charge and knew what she was doing.

Now we know the identity of those investors.

They were the members of the Guelph city council supported by senior managers. Translation, those “unknown investors” were the citizens of Guelph represented by those city councillors they elected. It was a colossal failure by those elected representatives to assume their sworn fiduciary responsibility.

There was no public knowledge of the GMHI operations or the growing financial losses that built up for four years. The GMHI Board of Directors operated almost all the time in closed-sessions.

Nightmare at 1 Carden Street

The defeat of Mayor Farbridge in October 2014 was the start of the flood of information until May 16, 2016 when a report signed by GMHI’s CEO Pankaj Sardana. He replaced Ms. Pappert who left the administration ten days later.

There were no tag days for Ms. Pappert who was paid $263,000 for five months work according to the 2016 provincial Sunshine List published in March 2017. That amount included her 2015 performance bonus of $27,000. Wouldn’t that be called double dipping?

But why repeat the bonus in 2016 when she only worked for five months?

Council hired the accounting firm KPMG to conduct a consolidated audit of GMHI and its links to both Guelph Hydro and the city. That revealed the shareholder’s liability of $66 million.

The KPMG audit confirmed the cost of a project that was controlled by the Farbridge administration, aided and abetted by city councillors and senior staff.

Servicing the carrying costs of this investment by the city loan was estimated to carry 2 per cent interest cost. That’s $1,300,000 per year. When this is added over slightly less than three years, the debt is now stated as $68.3 million on the GMHI and city books.

Now, add in the growing annual $1,967 245 of GMHI “tax losses” of Guelph Hydro subsidiary Envida Community Corporation. You don’t have to be an accountant to figure out this was a growing serious financial disaster. It adds up to between debt-servicing and so-called tax losses, to some $3,268,245 every year.

Note: Tax losses can only be recovered when there are tax gains. GMHI never made a dime in its existence.

The arrangement of “the investors” loan to GMHI was one pocket being picked by another, with the public not knowing how their money was being played.

This was an example of municipal corruption at the highest level. It deserves a provincial inquiry to return the city to responsible management and reveal the truth.

Following the mone

The sick joke about all this is the some $10.5 million that GMHI allegedly sent to the city treasury through Guelph Hydro over a six-year period. Was it just a book entry on the GMHI balance sheet or did the cash really get transferred. How does a money-losing millions GMHI afford to send an annual dividend of $1,500,000 to the city?

That money was paid indirectly by the City of Guelph with no reduction of principal of the GMHI “investors” loan. It was the accounting merry-go-round of money between GMHO, Guelph Hydro and the city. Remember the city, that’s you and me, were the bankers.

Did Guelph Hydro, through its subsidiary, Guelph Hydro Electric Services Inc (GHESI), mortgage the city by more than $66 million due to those “institutional investors” aka city council, who provided the money?

The answer is no. The funds were advanced by the City of Guelph and approved by council. Who served on the GMHI Board of Directors? It was four loyal Farbridge councillors, Lise Burcher, June Hofland, Karl Wettstein and Todd Dennis, giving the mayor an ensured majority on city council and GMHI Board.

This resulted in blocking public accountability and transparency conducting the public’s business.

There’s a new sheriff in town

When newly elected Mayor, Cam Guthrie, took over city council he was handed a rock known as GMHI. As a member of the previous council, did he know about GMHI and its financial problems? It took a year of learning about the serious damaging details facing the GMHI financial disaster.

Yet, under his watch, city council held 42 closed-session meetings in 2015, thereby denying the public information about GMHI and its troubles. The shroud of secrecy descended barring accountability. During this period, who was his chief source about GMHI? Why it was CAO Ann Pappert.

Is it possible that Ms. Pappert sold out Karen Farbridge? Is that why council, in closed-session December 10 2015, rewarded Ms. Pappert with a $27,000 retroactive performance bonus? Was it for her work as CAO and CEO of GMHI since 2011?

Following the devastating staff report in July 2016, details of the depth of the GMHI mess became known, but not all the details. The plan to bail out of the multi-million dollar debacle was not revealed.

Any attempt to keep this failed project alive is just pushing more money down the rabbit hole, with no guarantees the city ever gets our money back or stops the bleeding of funds.

Next, Part Five: Along comes Alectra

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Thoughts on the gradual death of print journalism in Guelph

By Gerry Barker

December 26, 2018

The Mercury Tribune has dropped its Tuesday edition. The paper is promising every Thursday “readers will find analysis, investigative stories, commentary and a variety of content written by our award-winning journalist.”

Also a;pended are about three pounds of advertising inserts, the bread and butter of the enterprise.

In just two years, Metroland Publishing, a division of the TorStar, proprietors of the Toronto Star, has shut down the daily Guelph Mercury and now the Tuesday edition of the Mercury Tribune.

Ah! But stay tuned. The company says it is providing online coverage 24/7 of the news and commentary. Readers must register in order to access the website. The paper is not demanding your first born but just the usual name, address, telephone number and email to access it.

Welcome to the cyber Age of Aquarius, the new electronic access to the news.

The following are important stories about Guelph that are rarely covered in depth by the eviscerated print media. Instead, when questioned, the newspaper says it doesn’t have the space or resources to dig into the stories that affect every citizen in Guelph.

Here’s a recent sample of lack of coverage:

* Explain the “Open Guelph,” a statement of about open government in relation to city council accountability and transparency. Why are they still conducting the public’s business by closed-sessions?

* Explain why Guelph property tax rates and user fees increase every year by far greater than the equivalent of the Consumer Price Index.

* Failure of the Economic Development staff to expand the industrial and commercial assessment to reduce costs to property owners and businesses.

* Guelph Hydro merger that will see the end of the city-owned electricity distribution system that closes at the end of January.

* How much is the city spending advertising in the Mercury Tribune?

* Explain why it has taken five years to renovate the downtown Police HQ that is not expected to be complete until December 2019?.

* Where does council spends the $10 million in gas tax rebates it receives from the Federal and Provincial government?

* How much, if any, do those rebates go toward creating more bike lanes and trails?

* How much of the gas tax rebates are used to expand downtown parking?

* What are the operating and capital costs of the Guelph Civic Museum since it opened?

* How does that figure square with the cost of subsidizing the downtown library?

* What is the status and costs of replacing the Niska bridge?

* Explain the source and details of the financial statements in “Financial Snapshot” section published in the city’s website called: “2017 Report to the Community?”

* What is the ratio of residents using bicycles on Guelph streets and roads compared to those using vehicles?

* Are cyclists subject to the regulations of the Highway Traffic Act? If so, why are they not licensed and carry insurance?

* What are the stats of bicycle and vehicle collisions in 2017 and 2018? What are the injuries to cyclists and drivers? What are the charges brought by Police Services Board and the rationale?

* How much money has been given away or loaned by the city? Aso, explain whar taxparer’s finds are being used to support the Kazoo Festival?

* How much is it costing the city staff services to support the University of Guelph and Conestoga College?

* * * *

Every example listed here costs those citizens who own or rent property and pay user fees.

It’s your money and you have the right to know how it is being spent.

Happy New Year! May good health and prosperity come to you and yours in 2019.

Gerry and Barbara

 

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The stealthy shadow of civic corruption that hangs over Guelph

By Gerry Barker

December 17, 2018

Opinion

In a recent letter to the media by Kevin Bowman, we learned there are three levels of denial employed by the administration to suppress public access to view the reason and results of all closed-council meetings.

Mr. Bowman expressed concern about the administration’s shutting down a complaint about the Clair Maltby Secondary Plan that was discussed in closed-session by council in June 2018.

A decision was made five months later in November, made by the inner sanctum of the outgoing city council, absolved itself and the staff of any wrong doing citing conformity with the Ontario Municipal Act rules concerning closed-session meetings.

The excuse supplied said the city’s procedural bylaw laid out the rules of conducting a closed-session meeting.

Let’s stop for a minute. How many of you out there are familiar with the city’s “procedural bylaw?”

Mr. Bowman did his homework and his following comment is clear and right: “Everything done in the name of the public … should be public.”

Otherwise, denying the right of the public to be able to access closed-sessions conducted by council, elected to represent the people of its business, could well be described a cover-up or, worse still, civic corruption?

Reading this post there is a number that will popup throughout the piece, 84, that’s the number of closed meetings conducted by council in the first two years un office by the Guthrie administration.

As it has now turned out, these 13 councillors were all complicit denying the right of legal public participation in the business of the city. But we’ll never know the result of those 84 votes.

One of the most important aspects of this denial, not only the purpose of the meeting, the discussion or the result of the vote, it’s today the blatant disrespect of the people’s interests in such a disgraceful undemocratic manner. Remember, there were 84 closed-session meetings in 24 months.

Now here’s where this council tramples on your rights

Attempting to obtain the results of Clair Maltby close-session meeting, Mr. Bowman revealed there were two levels of special investigation committees to determine if the information denied to the public could be revealed.

The first was to advise the staff, called the Technical Advisory Group or TAG. The second committee was the Community Working Group or CWG for the Clair Maltby Plan. The identity of the two committee’s personnel, their expertise, their pay or how they were selected is not known.

So instead of involving the public, two faceless, unelected committees with no authority, are deciding whether to allow a citizen’s complaint to be made public.

But wait! There’s more. Super-imposed over this issue are the real hired guns to have the final say in whether you allow the results of a closed-session meeting of council to be made public. It’s called Amberlea Gravel that is on retainer with the city to investigate closed-session meetings of council.

This outfit, retained by the city since 2008, had investigated just four complaints by Guelph citizens. The record to date is just four, all denied. I was one of the four and it took four months to learn of their decision denying the minutes of the December 10, 2015 closed-session meeting.

Thanks to Mr. Bowman, I no longer feel alone.

Pretend you are a judge. Would you accept the argument that the people are not entitled to closed-session meeting details?  Remember those 84 closed-session meetings in 24 months.

Is there reasonable doubt that council is using closed-session meetings to suppress public interests?

The evidence is clear that the Closed-Session Investigator, Amberlea Gravel, only received four requests for information about specific meetings in 10 years tells me there are a lot of secret meetings going on. With respect, that thwarts the meaning of the Ontario Municipal Act. I believe that it is a deliberate policy to deny the public‘s business to, well be public about it.

In my opinion, it’s a corruptive practice and should be investigated by the authorities.

I refuse to believe that the Municipal Act intended to allow municipalities to wander off the reservation rules for conducting closed-session meetings and set up the so-called procedural bylaws serving only the interest of the administrations.

Let’s consider the second greatest cover-up of all

I take you back to December 10, 2015. It is close to approving the 2016 city budget. Council went into a closed-session to discuss, as it turned out, salary increases for four senior staff. There were never any details of that meeting revealed by the Guthrie Administration.

Fast forward to March 21, 2016 when the 2015 provincial Sunshine List was published. It identified every public servant in Ontario earning a salary of $100,000 or more.

Remember, the public was never told about the closed session meeting. So, like any reporter, I pulled up the 2014 Sunshine List and checked it against the 2015 figures for those four top staff managers. I discovered that the four, CAO Ann Pappert, Deputy Chief Administration Officers (DCAO) Derrick Thomson, Mark Amorosi, and Albert Horsman collectively split $98,202.

The dollars and percentages allotted of that pie were:

CAO Pappert, $37,591 (17.11 percent);

DCAO Thomson, $33,834 (19.48 per cent);

DCAO Mark Amorosi, $26,826, (14.7 per cent)

DCAO Albert Horsman. He left the city in August 2015 before the closed-session meeting of Dec. 10. The 2015 Sunshine list shows he was paid some $157,000. His share was never revealed.

Another revelation of Ms. Pappert’s departure

Here’s a wrinkle that has never been revealed in the media. When the 2016 Sunshine List was published the Former CAO was paid $263,000 and worked only five months of the year. Dividing the 263,000 by 12 equals a monthly payment of $21,916.

When Ms. Pappert resigned May 16, 2016, why was she paid $153,416 for the seven months when not employed?

Who authorized that excessive payout? Further, why didn’t the Guthrie Administration inform the public? The public never knew until 10 months later, after she resigned, when the 2016 Sunshine List was published in Match 2017.

Ask yourself; did you believe these increases were justified? Do you believe the drizzle of explanation from the administration was appropriate and responsible?

If so, why did they cover it up?

It was a concerted effort between a needy council and powerful senior staff.

The strangest part of this cover-up was that didn’t council approve these increases not realizing it would be reported when the 2015 Sunshine List was published? This was an ill-informed and awkward decision by the very people elected to represent the people.

In my opinion it is a perfect example of civic corruption.

Of the four senior staffers or beneficiaries, only Mr. Thomson remains as Chief Administrative Officer of the city. One remains unconvinced that this party is still in play and operating with impunity and rare public scrutiny.

Here’s an example. When appointed CAO in June 2016, Mr. Thomson announced he would reveal his salary. The figure he used was that he signed a three-year contract of $230,00 plus an $11,000 taxable benefit. Well the 2017 Sunshine List reported him earning $263,000 plus taxable benefit.

He did not announce that but it was in the Sunshine List reporting the salaries for 2017.

Do we need to keep supporting these senior manager’s practices without recourse or accountability?

The recent re-election of city council returned the same individuals who participated in all those closed-session meetings. The only tool the public can rely on for accuracy are the provincial Sunshine Lists.

Is this anyway to run a railroad? Or, are we the people getting railroaded?

Oscar Wilde was once quoted: “The only way to get rid of temptation is to give in.”

Unfortunately, given the result of the recent civic election it epitomizes that power corrupts, absolute power corrupts absolutely.

Breaking news

The Guelph Mercury tribune is asking readers to register to obtain the stories and features online.

Having operated a controlled distribution newspaper in my career, I know what’s going on.

First, the advertisers want proof of the circulation numbers, where the paper is being delivered and confirmation of delivery.

Second, it is an apparent innocent appeal to invite folks to register that is a potential prelude to converting to paid circulation.

In my opinion, if the management decides to go that route, they will have to beef up their editorial coverage to not be reliant on city press releases puff pieces and the police incident records.

I am reminded of a comment made by Tribune Editor Doug Coxson in a Globe and Mail feature on the Guelph media two years ago. He was quoted as saying that the Tribune was planning to do more investigative reporting.

I’ve been covering the Guelph political beat for 12 years and have yet to read one investigative story in the paper.

 

 

 

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This is what the provincial Sunshine List doesn’t tell you

By Gerry Barker

July 4, 2017

It was 21 years ago that former Ontario Premier Mike Harris’s government introduced the provincial Sunshine List naming all public employees earning $100,000 or more. The first list contained the names of every public employee who was paid from the public purse. That includes municipal employees.

The List also included the taxable benefits received by those employees earring more than $100,000list

What were never included are the benefits that municipal council is contracted to pay. These benefits include pension contributions, vacation and sick leave not used during employment. Throw un-paid health care upon retirement and in the case of non-union management employees, special contract terms applicable to their position.

Guelph management considers these accumulated management benefits confidential and negotiations are conducted in closed sessions. The fly in the pudding is the argument that such secret details are to protect the taxpayer. From what? It’s all about revealing too much detail for other management employees now and in the future.

Let’s look at a recent example. Our former Chief Administrative Officer (CA) was promoted to succeed Hans Loewig in 2011. As a result, her salary increased by more than $40,000 and she did not live in Guelph. A year later, she was advised by council to make Guelph her permanent residence moving from nearby Waterloo. As a special consideration, council agreed to give her $20,000 moving expenses if she moved within 90 days, and she did.

Ms. Pappert was also named Chief Executive Officer (CEO) of the newly formed Guelph Municipal Holdings Inc. This was an initiative by former Mayor Karen Farbridge using the Community Energy Initiative to make Guelph a world leader in environmental and renewable energy self-sufficient.

She remained CEO for four years up to her April 2016 resignation and leaving May 26, 2016. In 2013, her salary was listed in the 2013 Sunshine List as $214 thousand. The 2014 Sunshine List showed her salary to be $219,657. Apparently Ms. Pappert’s salary and benefits were discussed, again in closed session, prior to council approving the 2015 budget, March 25, 2015.

Then a closed session of city council, December 10, 2015 awarded the four top city managers a total of $98,202 in increases. But this was not exposed to the public until March 2016 when the provincial Sunshine List was published. One of the four, former Chief Financial Officer Al Horsman, resigned in August 2015. The 2015 Sunshine List revealed in March 2016, that he received $188,999 for eight months on the job.

Ms. Pappert, who worked for five months in 2016, received $263,757.32. From January 1, 2015 to May 26, 2016, Ms. Pappert was paid a total of $489,818.26 or $28,812 per month. Plus she received an estimated $8,783 in taxable benefits.

This placed her as being paid more than the Premier of Ontario.

Part of her resignation package included unused accumulated sick and vacation day payments and a retroactive performance bonus of some $26,000.

Looking at her salary and taxable benefits for her five years as CAO of the city, her gross salary and taxable benefits exceeded more than $1 million.

But that’s the tip of the iceberg. There are the pension benefits that citizen are obligated to honour. Lifetime ealth care plus other perks embedded in her contract.

The underlying problem is that council has failed to review and control these management positions based on performance and professionalism. In 2016, there were 96 non-union management positions. This is the underlying problem of the high cost overhead of operating the city.

Police and fire department salaries are excessive and citizens are helpless to do anything about it because salary disputes are settled by outside arbitrators.

Guelph has become a Mecca of public employees who enjoy unfettered salaries, benefits and job security. Also what most citizens don’t realize is the long-term liability of overly generous pay packages that include, in most cases, hidden perks. The public servants of our city collectively represent the costliest item in which more than 80 per cent consumes most of the operational and capital budgets.

The size of the staff today (2,235) is some 850 more than it was in 2007 (1,450). That’s an increase of 58.6 per cent. This data comes from a city report.

The latest Statistic Canada census figure states Guelph’s population is 131,000. In 2007 the city population was some 119,000, an increase of 12,000 since or 10 per cent.

Tell me, how does the administration justify a staff increase of 58.6 per cent when the city population only increased by 10 per cent? Did it require an additional 850 employees to handle the12,000 new-comers to the city?

For every new full-time employee, the citizens are responsible to guarantee millions in future pension benefits. Yet three councils in those 10 years have failed to understand the long-term liability of staff. In fact, even when informed by the Fair Pensions for All group, they refused to believe it.

With the millions of dollars wasted on their watch, it only points to the total ignorance and failure to maintain their fiduciary responsibility to the citizens. Remember them? They just pay the bills and deserve better representation.

Not all councillors are financially challenged. Next year, it is important to elect councillors who are not isolated by dogmatically-possessed individuals who are thick as treacle on a cold winter’s day.

We deserve better.

Climate change anyone?

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Audit of GMHI and Guelph Hydro reveals $161.483 million losses by the municipal holding corporation

By Gerry Barker

June 22, 2017

What follows are highlights of a devastating audit by KPMG of Guelph Municipal Holdings Inc. (GMHI) and Guelph Hydro. The audit revealed a total of $161.483 million that was wasted by the Farbridge administration’s secret and abortive attempt to force the city to make Guelph self-sufficient in terms of electricity and other spin-offs.

One of the most startling statements concerned two senior unsecured debentures taken out by GMHI totaling $103.612 million as of December 31, 2016. The largest, due 2030, was for $65 million and no interest of the debenture has been paid for two years, increasing the principal due by $8.612 million. The other debenture is for $30.000 million and is due 2045. Both these obligations carry interest rates of 4.012 per cent and 4.112 per cent respectively.

The source of these debenture loans are described in the audit as the CDS & CO. As both are unsecured, the loans were made because of the City of Guelph’s ownership of GMHI and Guelph Hydro. It is difficult to imagine any financial institution committing $95 million without the assurance of repayment by the city. Regardless, the loans are unsecured. One can only conclude that a corporate relative within the city’s corporate family guarantees the liquidity of GMHI. The audit revealed that a $20 million credit facility has been arranged for GMHI but the source is not revealed. As of December 31, 2016, there has been no draw down on that facility by GMHI.

The balance sheet of GMHI shows assets of $230.596 million of which $162.653 million is composed of property, plant and equipment. Conversely, in my opinion, many of these assets are depreciating and failing to provide adequate cash flow to allow GMHI to continue to exist. The real liabilities of 163.474 million closely match the value of the total assets. The inclusion of shareholder equity of $67.122 million, according to the audit, is enough to match the total assets of $230.596 million to balance the books

In my opinion, the shareholder’s equity, and that’s you and me, is virtually worthless because there is not enough cash from operations and assets to allow redemption of the shares. This enterprise is so intertwined between various city-owned corporate entities that disclosure is inevitable.

This party needs wrapping up ASAP to avoid future cost blowouts.

This misguided project has been held up by the ability of Guelph Hydro to be the bank for GMHI. A search of the mysterious issuer of $95 million in debentures has been unsuccessful so far.

This audit reveals just how serious this experiment was mismanaged; how Guelph Hydro, wholly owned by the city, was sucked into the blind ambition of a mayor determined to turn the city into a world-class leader in power self-sufficiency.

It turned out to be a dismal, waste of the public’s resources and abuse of the public trust.

The audit performed by a respected auditing and financial management firm, KPMG, cost $2.8 million in 2016 and $2.5 million in 2015. These two audits totaling $5.3 million, were the cost of measuring the financial details of the failed projects initiated by the Community Energy Initiative (CEI) promoted by the former mayor as far back as 2007.

Here’s a note from the auditor’s report concerning fraud risk: “The audit team rebutted this presumption due to: “The majority of revenues are driven directly from the purchases of hydro with little judgment over revenue recognition required by management.”

Yes I know, I had trouble following that comment.

From 2011 to 2014, former Chief Administrative Officer of the city, Ann Pappert, served as Chief Executive Officer of GMHI. One would conclude in that position, both the former mayor who was chair of GMHI and Ms. Pappert would be in a position to know about the degree of “judgment over revenue recognition required by management.”

Keep in mind that this entire operation was cloaked in secrecy. It only started coming out of the closet when the GMHI CEO and CFO, Pankaj Sardana, reported the costs of poor planning and management of GMHI and its partner Guelph Hydro (GH).

May 16, 2016, Mr. Sardana and CAO Pappert both signed the document that revealed the estimated loss of GMHI to be $26.6 million. Ten days later Ms. Pappert resigned.

The utility’s operating arm, Guelph Hydro Electric Systems Inc., included the wholly owned Envida Community Energy Systems that was virtually broke. It owed $11 million to GMHI with no ability to even pay the interest of the debt. It had been involved in establishing the rooftop solar arrays on a number of public buildings; the setting up of the District Energy Nodes linked to the cogeneration system to supply hot and cold water to selected buildings.

But it was interrupted by the defeat of the former mayor in the October 2014 civic election by Coun. Cam Guthrie. It started an investigation about the role of GMHI and the link with Guelph Hydro. Now, a year and a half later, the truth is known about the cost of $161.403 million.

The unraveling of the GMHI and Guelph Hydro axis started shortly after the defeat of the former mayor.

The audit examining GMHI/Guelph Hydro operations for 2015 and 2016, commented:

“The district energy segment has continued to experience negative cash flows which are projected to be insufficient to recover the carrying value of the related assets.

In four years, the GMHI management failed to recognize their primary District Energy scheme was failing to meet profitability. Yet they kept spending public money of future large-scale projects including building two large natural gas-powered electricity generators in the city to achieve power self-sufficiency.

“Management has assessed Envida’s district energy property, plant and equipment for impairment and evaluated the cash flows associated with the Hanlon Creek Business Park, Galt District Energy (Sleeman Centre), and West End Community Centre. Based on value-in-use net present value calculations, management has determined that the carrying value of all the nodes are fully impaired.”

We now learn according to the audit, that there were not just two District Energy Nodes (pumps) in the Sleeman Centre and Hanlon Creek Business Park but a third in the West End Community Centre. The impaired value of the three is $12 million.

“Further, based on the obligations for contracts in place and the related estimated unavoidable costs of meeting the obligations exceeding the economic benefits to be received by approximately $50K annually over the life of the contracts, a provision has been recorded for $540,000 (18 years).”

This is another example of financial mismanagement by GMHI based on false assumptions.

“Management’s cash flow projections were based on the business plan for the segment for the upcoming years. Their analysis took into account factors including the remaining contract periods for agreements in place with current customers (approximately 18 years), history of revenue and expenses to date, and the useful lives of the equipment. Further, based on current plans and direction from the Board, the analysis includes only minimal additional investments required to service current customers.”

Why then did the experience and track record of the GMHI Board and that of Guelph Hydro, make so many devastating mistakes that have resulted in the loss of millions of public funds?

The audit statements include an estimate of future employee benefits totaling $10.297 million. Again, the citizens of Guelph will be paying for this for years.

Why Did GMHI send $1.5 million to the city each year, (total $9 million) when it consistently lost money?

How can GMHI or the city afford to repay that $103.612 million in debentures owed to CDS & CO, the lenders?

Who are the owners of the CDS & CO?

With the shareholders equity of $67.122 million be written off in the years ahead, impairing the city’s ability to carry out the ten-year capital-spending plan?

CAO Derrick Thomson has already stated the capital plan is $170 million short to provide for major capital projects, including the South End recreation centre, new downtown Library and infrastructure demands.

Is the real goal of the Strategic Options Committee (SOC) charged with seeking candidates to sell Guelph Hydro or merge it with another utility, or to raise capital to recover the losses incurred by GMHI?

When will those councillors who served on the GMHI board of directors plus another independent member now serving of the SOC, be held accountable for what happened?

The audit documents can be found on the city website under the heading Agenda June 28.

It is the most shocking report that I have ever witnessed in my years of journalism. The secrecy resulting in an abuse of power should be a wake-up call for all citizens. The council should be held accountable to maintain the public treasury and never allow this to occur again.

This makes the $23 million cost overrun construction of the new city hall look like penny ante compared to the $161.403 million spent on this rape of the public purse.

The audit is first step. Now we know what happened, What is need is an independent investigation into how it happened and the impact on the citizens. More important, question those responsible and make them accountable.

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Is the Dark State ruling Guelph?

By Gerry Barker

May 23, 2017

Yes, who is running our city? Why have there been so many closed session meetings of council? Whose reputation is being protected?  Why is the public’s right to know being consistently thwarted?

In a letter to the editor in the Toronto Star, Pat Biondi, takes umbrage over an editorial in the paper entitled: Long live the deep state in Washington – May 19.

Biondi’s opening paragraph set the stage for a blistering criticism saying, “I could not believe the Toronto Star, the self-proclaimed bastion of democracy, would stoop to such a level.”

At this point, I should reveal the headline of the letter: “Civil servants subvert the will of the people.” Such headlines are designed to capsulate the content of the letter but also to attract the reader.

It sure got my attention.

Biondi went on to say, “that in a democracy, it is the elected officials empowered by virtue of the ballot box. It is those same politicians who are held accountable for their actions the next time the electorate is asked to pass judgment on their performance while in office.”

That has a familiar ring about it when it is applied to Guelph governance. Looking back, the electorate in Guelph responded in October 2014 to defeat the mayor and two of her council supporters plus two others who chose not to run.

Biondi continues: “A deep state (i.e. civil servants) working in the shadows is the antithesis of what democracy is all about. The notion that a few unelected and unaccountable career civil servants can subvert the will of the people expressed in a free election is absurd and dangerous in the extreme.”

Starting to see what the letter writer is talking about as it’s applied to the unelected senior management of the City of Guelph in the past 10 years?

It’s no secret there has been an inordinate amount of turmoil in the past two years not only among the senior staff but also with the hardworking rank and file who carry out their orders. Look no further than the lawsuit by a fired 30-year veteran of the city Building Department, Bruce Poole, who performed as Chief Building Inspector for the past 20 years.

Mr. Poole sued for $1 million for wrongful dismissal by former Chief Administrative Officer Ann Pappert.

Follow a mysterious dump of some 53,000 emails sent to Poole’s lawyer containing hundreds of confidential and personal information, the case was promptly settled by the city. It was a legacy left by the former top civil servant for the citizens to pay.

Here is another statement by Biondi. “ When a society is governed by a deep state, democracy crumbles and anarchy ensues.”

Isn’t this the accurate description of how Guelph has been controlled by a two-term autocratic mayor and equally pervasive senior civil servants? They were really running the city with the support of a council that rolled over in their sworn responsibilities to the public.

The examples of that eight-year domination of Guelph governance have been well documented. Millions were wasted on social engineering projects under the guise of world leadership. This included making the city into a world-class leader in the environment, reduction of greenhouse gases, and restriction of vehicular traffic routes to accommodate bicycle lanes and waste management.

What really occurred in that time period, was increased property taxes by a compounded 36.7 per cent; the cost of basic civic services such as electricity and water soared; waste management’s so-called innovation racked up millions in operations and capital and it mostly occurred in secret sessions of council.

Autocratic senior managers and members of council, almost all who have left the city, for a variety of reasons, have left a legacy of alleged corruption and financial mismanagement. Yet, the disastrous policies of the previous administration continue to be supported by the majority of the current council.

Any evidence of city council working together to solve the tattered legacy of the previous administration has not happened in three years. The majority of council is known as the Bloc of Seven as they frequently vote as a bloc thereby dominating the 13-member council.

Regardless, some pluses have occurred, including revelation of the Guelph Municipal Holdings Inc (GMH. This wholly owned subsidiary of the city is the most costly failure by the previous administration. Chaired by the mayor, this functioned under the Community Energy Initiative, with former CAO Pappert as Chief Executive Officer of GMHI for four years.

Losses to date are $26.6 million plus a $60 million impaired loan from Guelph Hydro that has no collateral in GMHI to even pay the interest. That loan now sits on the city books as a declining asset.

Are you starting get the picture? In my opinion, this is why there is a concerted effort to sell Guelph Hydro, wholly owned by the city, to cover up the huge liability of GMHI.

Ms. Pappert left the city in May 2016, following publication of the provincial Sunshine List in March 2016 of those earning more than $100,000. It reported that she had received an annual salary of $237, 501. This was received even though she only worked five months in 2016. Her increase, along with three other senior managers, was approved in a closed-session meeting of council December 10, 2015. The public was made aware of the $98,202 awarded to four top managers in March when the Sunshine list revealed the increases.

In view of this, why does the mayor continue to endorse Ann Pappert who is seeking a new job? Mr. Guthrie is mentioned twice endorsing Ms. Pappert in her lengthy new profile posted on LinkedIn

It’s all part of the culture of entitlement that pervades the senior management of our city from civil servants to elected councillors. Both share responsibility with one glaring exception: Every four years, councillors must face their constituents and explain their performance. Meanwhile, the hired staff is free to carry on as if there was no election.

A clear example was the reorganization of the top senior staff in November 2014. CAO Ann Pappert conducted the reorganization during the lame-duck period between the changes of administrations. Mr. Guthrie took over December 1, 2014. The new council never had the opportunity to approve the new management arrangement because it was not in charge at the time.

It only took 13 months for the top four managers to receive hefty increases and the public was never informed until March 2016.

I realize that some GS readers are critical of the constant reporting of this event.

It states truth to power and the perpetrators got away with it and now only one is left, CAO Derrick Thomson.

Judge for yourself; is this a responsible and honourable way to run our city of 131,000?

Only if a resolute, informed and politically centrist group of councillors are elected in 2018, can necessary true reform and change occur.

 

I would be interested in hearing from readers about their feelings, good, bad or indifferent. Send your comments to guelphspeaks.ca or email gerrybarker76@gmail.com. Your identity will be protected if requested. Thank you.

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The high cost of departed senior City of Guelph managers

By Gerry Barker

May 18, 2017

We learned this week that former Chief Administrative Officer (CAO) Ann Pappert is looking for a job according to an extensive online Linkedin profile. Ms. Pappert left the city last May 26 for a new position as Assistant Deputy Minister in the Tourism, Culture and Sport Ministry.

That position lasted from October 2016 to February 2017. For whatever reason, she left prior to expiry of her six months probation. The 2016 Ontario Sunshine List shows Ms. Pappert received $263,757 from the city of Guelph although she only worked barely five months. The question is: What were the other benefits to which she could have been entitled? What were the terms of her contract? Such benefits could include pension, car allowance, unused vacation and/or sick time, travel expenses and insurance.

We do know that part of her package awarded in December 10, 2016, during a closed session by council, was reimbursement of unused vacation time, and a $28,000 retroactive performance bonus. Much has been written about that closed session but there has been no official acknowledgement or explanation why Ms. Pappert, Al Horseman, Derrick Thomson and Mark Amorosi were given such high increases.

The kicker is not one person in the entire Guelph administration said a word about those increases until the Sunshine List was published in March 2016.

The revelation ignited a wave of the four senior manager’s departures. Pappert left in May, Thomson resigned shortly after the Sunshine list announcement to take a job with the Town of Caledon, Al Horsman left in August 2015, and Mark Amorosi left the city last February.

These four executives were handsomely rewarded by a gob-struck city council, in secret, not having the guts to tell the people who pay the bills. To this day the minutes of that closed session are locked up. I know, I tried to get them released. Turns out the special “Closed Session Investigator,” a city paid consultant from London took four months to even reply to my request. Their opinion is that the city acted according to the rules of the Ontario Municipal Act.

The thing that citizen’s should take away from all this behind closed-door handling of the public’s business is that our Mayor, Cam Guthrie, went along with it.

Today only Mr. Thomson remains the last of four top senior managers who, after resigning, was hired last June to take over the CAO’s job. Why wouldn’t he? His first year on the job will earn him $245,000 including a $9,900 car allowance. To his credit he went public with his salary.

There were some astonishing inclusions and exclusions.

According to the 2016 Provincial Sunshine list, former CAO, Ann Pappert, was paid $263,757.32 in 2016. Now you would assume that was for the year but Ms. Pappert left the city May 26, 2016, Seems like a lot of money for less than five months work. Why did she earn a $28,000 performance bonus? People earning performance bonuses don’t plan to leave, so why did she leave Guelph?

Checking the 2015 Provincial Sunshine list it showed Ms. Pappert was paid $226,060.96.

The only possible conclusion was that Ann Pappert was paid $489,818.26 for 17 months work as CAO, from January 1, 2015 to May 26, 2016. That works out to a monthly salary of $28,812.

At those rates, why did she resign when the Sunshine List revealed her increase onMarch 2016?

So while her provincial government job did not pan out there are still many unanswered questions about that December 10, 2015 closed council meeting. A total of $98,202 salary increases was awarded to Ms. Pappert, Deputy Chief Administrative Officer’s (DCAO) Al Horsman, Derrick Thomson and Mark Amorosi.

But there is more:

Former Chief Financial Officer, Al Horsman, left the city in August 2015. Today his name shows up receiving $188,999 in the Sunshine 2015 report, the equivalent of a full year on the job. Not bad for eight months work … in 2015. The question is, why did Horsman leave? He was deposed as CFO in the November 2014 reorganization of the senior management and switched to the Waste Management, Environmental Services and Engineering portfolio.

Former CAO Ann Pappert supervised that reorganization, following the 2014 civic election.

Horsman discovered the debacle of the deal made with the Rizzo brothers of Detroit to recycle material shipped from the motor city. The deal fell apart and was reported to have cost Guelph some $2.5 million. In December 2015, Solid Waste General Manager Dean Wyman, who was involved in the Detroit deal, left for a similar job in Edmonton.

DCAO Scott Stewart is now engaged in a rationalization procedure to discover and fix why the Waste management operating costs are losing $270.000 a year.

With Horsman gone, it left just three Senior managers, CAO Ann Pappert, DCAO’s Mark Amorosi and Derrick Thomson.

The revelation of the large increase awarded by council to the remaining three top managers in March 2016, triggered the resignation of Mr. Thomson who said he was taking a job with the Town of Caledon. In April, Ms. Pappert announced she was resigning. But Mr. Thmson came back.

Along with her duties as CAO, Ms. Pappert was also Chief Executive Officer CEO) of Guelph Municipal Holdings Inc (GMHI), for four years. As CEO she signed off, along with her successor at GMHI, Pankaj Sardana. They jointly presented the report to council, acting as shareholders, May 16, 2016. It revealed that the city-owned GMHI was broke and had lost $26.6 million. Ten days later she left her job.

The unfolding story of GMHI leaves many questions to be answered.

Was Ann Pappert paid two salaries for her two senior responsibilities as CAO of Guelph and CEO of GMHI?

Why did two Councillors, June Hofland and Karl Wetstein, both appointed to the GMHI board, not report to council about operations? The chair, former Mayor Farbridge, appointed them. Did they not realize that appointment carried specific fiduciary responsibilities to the public?

What was the role of Guelph Hydro in the Community Energy Initiative program?

How much did Guelph Hydro invest in GMHI in four years?

Why did Guelph Hydro loan GMHI $65 million without any collateral or expectation of repayment?

How can GMHI give the city $9 million over four years in dividends and lose $26.6 million in the same period?

Were the GMHI financial books audited, if so by whom and when?

What was the impact of Guelph Hydro bills to residents during the five year period, 2011 to 2015?

Will the city reveal the total wind-up costs of GMHI and when?

How do GMHI’s financial costs and losses impact the sale of Guelph Hydro?

Is the potential Guelph Hydro sale to pay off these GMHI losses and clear the city books of the debt?

This is the result of misuse of political power and mismanagement of city resources.

The closed session meetings, regardless of what the staff says, are nothing short of secret manipulation of events and decisions. Much of it is political because the city has been held hostage for the past ten years by the political left, supported by the powerful labour movement.

If the majority of citizens don’t complain and demand answers from their elected representatives, then nothing will change. Property taxes will continue to grow exponentially annually. The same will happen with user fees.

The fall-out is that we allowed a CAO to leave this city after receiving more than a million dollars after just over five years on the job.

We can only blame ourselves for allowing it to happen.

Our only chance for electing responsible and experienced councillors next year, to clean up the financial mess the city is in to reduce the operating overhead, restore the reserves and demand performance of the professional staff.

 

 

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